ANZ Research discusses the USD outlook and thinks that the greenback is setting the stage for a more sustained rebound over the coming weeks.
"We don’t think the [USD] decline will last; and, if anything, the risk of a rebound is intensifying.
While rates should have provided some support, our fair value model shows that the current USD weakness can be explained by the extremely positive risk environment.
Looking ahead, we expect that rate differentials will remain supportive of the USD and, importantly, that interest rates should continue to rise. This will drive further deterioration of risk appetite and add a further leg of support to the USD.
We anticipate this will primarily be against the AUD and the NZD," ANZ argues.